Insights 
VT 
The EUR/USD pair defends its support at the 1.1550-1.1540 range as the USD consolidates post-FOMC gains. The pair edges slightly higher on Friday, trading around the 1.1575 region, up less than 0.10% for the day.
The USD consolidation from recent gains acts as a tailwind for the EUR/USD pair, limiting any significant depreciation. The Federal Reserve’s hawkish stance, expressed by Fed Chair Jerome Powell, discourages expectations of another interest rate cut in December.
ECB Rate Continuity
The European Central Bank (ECB) maintains its key deposit rate at 2%, citing a medium-term inflation target near 2%. However, an uncertain economic outlook for the Eurozone amid trade disputes and geopolitical tensions, paired with divided opinions on future rate cuts, tempers bullish bets on the Euro.
There is a need for follow-through buying for further upward intraday movement. A break below the 1.1550-1.1540 support could trigger more losses. The EUR/USD pair appears set for a second consecutive week of losses, relying heavily on USD dynamics. Speeches from FOMC members are expected to influence the pair later on Friday.
The Euro, used by 20 EU countries, is the second most traded currency, accounting for 31% of forex transactions in 2022. Key ECB monetary policy decisions and economic data releases, such as inflation and trade balance, significantly impact its value.
Current Economic Context
As of today, October 31, 2025, we are watching the EUR/USD pair closely as it defends the critical 1.1550-1.1540 support zone. The US dollar is consolidating its recent strength following the Federal Reserve’s hawkish policy meeting, creating a temporary floor for the pair. However, the lack of any real upward momentum for the euro is a significant warning sign.
The dollar’s underlying strength is well-supported by recent data, with the latest US Non-Farm Payrolls report for September adding a robust 215,000 jobs. Furthermore, the Core PCE Price Index, the Fed’s preferred inflation gauge, is holding firm at 2.8% year-over-year, giving policymakers little reason to consider easing policy. This solid economic footing suggests that any dips in the dollar will likely be short-lived.
In contrast, the European Central Bank is facing a much cloudier outlook. The most recent flash estimate for Eurozone HICP inflation in October came in at just 1.9%, slipping below the ECB’s target and reinforcing their cautious stance. German manufacturing PMI also continues to signal contraction, which we see as a drag on the entire bloc’s economic prospects.
This policy divergence between a firm Fed and a hesitant ECB is the central theme driving this market. We saw a similar dynamic back in 2023, when aggressive Fed rate hikes pushed the EUR/USD significantly lower. The current setup hints at a repeat of that pressure, making any rallies in the pair appear as selling opportunities.
For derivative traders, this situation suggests positioning for a potential breakdown. Buying put options with strike prices below 1.1540 could be a prudent way to capitalize on a break of this key support level while clearly defining risk. The implied volatility on these options may increase if the support level gives way, amplifying potential returns.
Alternatively, selling out-of-the-money call spreads with strike prices above the 1.1650 resistance area could also be an effective strategy. This approach would profit if the EUR/USD pair remains range-bound or moves lower, collecting premium from the lack of bullish conviction. The key trigger remains a sustained daily close below 1.1540, which would confirm the bearish trend is resuming.
